Electricity distribution companies in Nigeria have said that the Federal Government has not been fulfilling its promise to pay the cost of subsidising the electricity consumed by customers on Band B to E.
The Executive Director of Research and Advocacy of the Association of Nigerian Electricity Distributors, Sunday Oduntan, stated this on Wednesday while featuring on Arise News TV to discuss the state of electricity in Nigeria, especially amid the frequent grid collapses.
According to Oduntan, only customers on Band A pay the right cost of electricity consumed, while the government subsidises about 67 per cent of what other customers should pay.
However, he said the government promised to pay for the shortfalls, but it has continued to default.
“Today, only people in Band A pay the true cost of electricity. If you are in Band B, C, D, or E, the government is subsidising your electricity consumption by as much as 67 per cent, which means you are not even paying up to half of what you should be paying, and the so-called subsidy is not being paid by the government. It is now a kind of shortfall because it continues to pile up,” Oduntan said.
He lamented that Discos have been selling electricity below the cost of production, saying electricity cost should not be about whether or not the people can afford it.
Oduntan maintained that while other countries started and completed their power projects in a few years, the Mambila power project has been ongoing for many years due to a lack of cost recovery.
“Many talk about people’s affordability, which should not determine the cost of electricity. It should be the other way around. It is time for us to put on our thinking cap. What is the landing cost of electricity? If the government thinks people’s earning power needs to be improved, that’s a part of their duties. Go and find out how much it costs to buy a brand new Land Cruiser and ask me how many meters or transformers I can buy with the cost of one Land Cruiser Jeep. So, it’s about priorities.
“The point I’m making is that the issue of cost has nothing to do with the private businessmen who have to recover their costs. Once we all agree on the landing cost, then we should know that we should not sell below that cost.”
What has happened to Nigeria over the years is that the government kept on asking that electricity should be sold far below the landing cost, and the government keeps on promising, ‘Don’t worry, we’ll give you the shortfall’, that is the subsidy. But it has never been done, that is the problem,” he lamented.
Recall that the Minister of Power, Adebayo Adelabu, has repeatedly called for a cost-reflective tariff as the government over the years failed to pay electricity subsidies.
Speaking further, Oduntan said the country needs a minimum of 30,000 megawatts of electricity to enjoy stable power supplies and reduce grid collapses but it is currently generating 5,000MW.
He attributed the challenges in the power sector to many years of neglect, saying Nigeria built no power plant between 1989 and 1999.
“The incessant grid collapse is because of lack of proper maintenance, lack of investment, and failure by successive governments to do the right thing over the years. Whatever you fail to do in the power sector in 1984 will catch up with you in 2024. What we have witnessed is, over the years, the government paid lip service to doing the right thing in the Nigerian power sector. And that is a fact.
“Between 1989 and 1999, a period of 10 years, Nigeria had four leaders. Nigerian population grew rapidly within that period of 10 years, but not a single power plant was built in our country. You built your power infrastructure in accordance with the growing population. And what we have had is the neglect on the fact of the government to do what they are supposed to do over the years,” he added.